Telewest dismisses takeover report

MichaelBaron

NEW YORK (CBS.MW) -- U.K. cable operator Telewest Communications Plc dismissed a report that it had been approached with a takeover offer by U.S. private equity firm Callahan Associates, according to a report published by Reuters Sunday.

London’s The Sunday Telegraph reported that Callahan had offered to acquire Telewest for six billion pounds, or $9 billion, in an effort to complete its European network.

The Telegraph article said Callahan, which already owns Spain's largest cable operator ONO and Numericable's cable operations in France, was backed in the approach by GE Capital and other U.S. banks and institutions.

However, Reuters reported that sources close to Telewest said there have been no talks and such a deal would not make financial sense for Callahan.

"Callahan ain't that dumb," Telewest Chief Executive Adam Singer was quoted as saying by a company spokeswoman speaking to Reuters.

Shares in Telewest dived to a 20-month low Thursday despite the firm's assurances that a shortage of set-top boxes would only delay its digital service by three months.

Other weekend press reports speculated that NTL Inc., Telewest's main rival, could be preparing a bid after a recent drop in Telewest's shares, Reuters said.

The Observer reported that NTL and Telewest were under pressure to weigh a merger as they struggle to compete in the digital TV market with pay-TV company BSkyB. A key factor was thought to be the desire of software giant Microsoft (MSFT) to see consolidation in the U.K. cable industry. Microsoft holds a 24 percent stake in Telewest and a five percent stake in NTL.

The Independent on Sunday said Telewest CEO Adam Singer has indicated he would be willing to talk to NTL about being taken over, Reuters said. The Independent quoted Singer as saying that though no talks were being held at the moment, to consider a possible deal with NTL was "legitimate speculation".

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